Tuesday, July 19, 2016

Brexit: the IMF expects hard tomorrow for the global economy – L’Obs

Washington (AFP) – The post-Brexit will weigh on the global economy, the IMF lowered its growth forecast Tuesday facing “exceptional uncertainty” created by the British vote for a release of the Union European, in a context of already bumpy recovery.

“the vote in the UK (…) gave substance to a significant risk of damage to the world economy,” the Fund International monetary his new quarterly economic forecast.

The gross domestic product (GDP) should grow more than 3.1% in 2016 and 3.4% in 2017, marking a decline of 0 1 point compared to April and a worrying stagnation compared to 2015.

the degradation is minimal for the time but, warns the IMF, it could take a different scale if London and the Member States EU struggled to agree on their new economic relationship and the crucial issue of access to the European single market.

“the protracted negotiations that are likely to precede the establishment of a new relationship between the UK and the European Union could affect more than expected global growth, “warns the IMF.

in a black scenario considered unlikely by the institution, and global growth would slow to 2 8% this year and the euro area would fall prey to “widespread tensions” in its banking sector

the impact on the UK, he will not be waiting. the IMF shows less optimism for UK growth this year (-0.2 points to 1.7%) and especially in 2017 (-0.9 points to 1.3%).

in assuming the worst-case scenario, the institution is even considering a “recession” if British sudden drop in activity in the City of London and decline in investment in the rest of the country.

the background is also not especially wearer. Voting for the Brexit “adds considerable uncertainty to an already fragile global recovery,” and notes the IMF, which was however willing to slightly raise its global forecasts before the impact of the referendum.

First World economic power the United States has started the year on the wrong foot with sluggish growth weighed down particularly by the trade balance and the dollar.

China in economic transition, continues to display an insolent growth (6.6% expected this year according to the IMF) but must negotiate its expansion with caution to avoid overheating.

“the continued use of credit to support the activity increases the risk a disorderly adjustment “in the second largest economy, warns the Fund.

the developing countries continue to suffer from falling commodity prices that significantly amputate their recipes.

First oil producer in Africa, Nigeria is expected to fall into recession this year (-1.8%), the risk of significantly slower growth in all of sub-Saharan Africa.

such a scenario would have “dramatic” implications in the region, according Obstfeld: the growth of the economy would be lower than that of the population, causing “a decline in income” per capita in an already corroded area by extreme poverty.

in these economic factors are also grafted geopolitical elements that can, too, mortgage growth.

“geopolitical tensions, civil strife armed and terrorism weigh heavily on prospects of several economies, including the Middle east, “the IMF said in its report also cites epidemic Zika virus in Latin America or the drought in east Africa.

the Fund is also concerned about “political divisions” in rich countries, which complicates the search for solutions to the crisis of refugees and fueling a downturn in economic discourse itself.

“a turn to protectionist measures is a real threat, “said the institution at the time, the United States, the Republican candidate Donald Trump threatening to impose tariffs against Mexico or China.

Only very slight relatives– –and clouds on the economic front, Russia and Brazil should see the severity of their recession subside this year with respective declines of 1.2% of GDP and 3, 3%.